Is There A Solar Conspiracy?

I hope to reduce any confusion about that while engaging the solar conspiracy theory.

Australia will have more than 1.4 Million households with solar panels on their roof in 2018. It seems in Australia people are voting for solar with their cash and credit cards.

I believe that efficient building considerations and solar electricity generation are two drivers with a long-term future.

This article looks to find whether there are solar power conspiracies that may get in the way.

So, this set of notes contains some of what I think about Solar.

It's my opinion without a sales pitch.

I believe that solar power is a slow developing innovation, one that shows potential for creating some great disruptive technology.

There will invariably be complaints from people who have installed solar panels. Sometimes people work out that their deal wasn’t everything they signed up for. Buying a solar power system is like drafting a prepayment plan for your longer-term future energy.

It’s going to take some people 10 to 20 years to financially benefit from their solar investment. Not everyone knows how or where the energy money flows? To many who install solar they simply say; "Show me the money!"

Free power from sunlight, long-term savings and strong returns on your investment. Solar proponents say will solar panels repay the capital in a few years. These are the attractive ideas that companies sell customers to suggest they install solar power now.

Not all people who buy a solar power system fully understood what they were getting into. Maybe for some that sounds like solar conspiracy theory. More likely it could just be evidence of quick sales hype - a sales ripoff! In some places, some power is better than none.

This Is How The Solar System Operates

Unless a battery bank backs your solar electricity generating system, it will only provide power when there is sunlight shining on it. That is probably obvious.

You can use whatever electricity the panels can generate after it goes through the inverter to become AC. The inverter changes direct current electricity from solar power into alternating current for most home appliances. The inverter feeds the home from the solar panel before it draws any extra power it needs from the grid. That keeps happening until the grid shuts down and then the inverter stops everything.

Some appliances have electric motors that need a start-up burst; some extra power when they’re first turned on. That includes appliances like your fridge/freezer, washing machine, air conditioner compressor or electric pump.

The inverter draws the extra electrical supply it needs to accommodate the short burst. That burst of extra power comes from the grid. If you had batteries the power surge would come from there. Solar panels alone might not be sufficient for starting the motor or compressor.

Solar Conspiracy Theory - Selling To The Grid

When the electricity production level is greater than the consumption the inverter exports the unused power across to the grid. For those places, which have some sort of feed in tariff arrangement, you get paid or credited for that power.

The inverter is like a “traffic cop” for your power system that directs power to where it needs to go. Your inverter ensures you use your own generated solar power first, and directs any unused power to the grid.

When you use your solar-generated power, you save by not paying the energy retailer for their power. If you require more power than your solar system can generate, the inverter draws the difference needed from the grid. Your power is free and the utility power comes at a price.

So, if your active appliances draw electricity from your solar panels during the day, you would conceivably save money. You could avoid paying full retail price for that electricity each day the panels operate. Your appliances may be consuming 10% of your own system’s power. The inverter will feed the remaining 90% of the solar powerproduced to the grid.

This household is not using as much power as its panels generate. The inverter automatically sends any unused power to the grid. You get paid a tariff for each unit (kWh) of energy that is bought by the energy retailer. Is it unfair or simply commercial reality that enables the grid utility company to pay you less for your power than you pay for their's?

After The Sunset, It’s A Different Scenario

There’s a different scenario after sunset. In this case, the building consumes power but none of it is supplied from the solar panels!

How much would it cost you to buy the power from your energy retailer after sunset? What is the cost, versus what payment did you get for energy produced and not consumed? Your inverter directs as much of your solar power as possible to self-consumption.

The utility might pay you $0.07 per kWh for power that you export. But, the utility will charge $0.28 per kWh for energy that you buy when the panels shut down. Your panels supply enough power, but timing of power supplies means you must sell four units for each unit bought.

You could save on electricity cost per month (for self generated power) at the normal grid kWh rate of 28c/unit. Over a year, that equates to significant savings for your self-generated electricity use.

The picture of living with lights off isn't one people want to see. You might buy a generator or install a bank of batteries for the power you sell to the utility. If you sell it then you make an income. Do you let the taxman know that?

Now, add your savings from using your own solar generated power with the power exported to the grid at a solar conspiracy theory level of 7c/unit.

The total energy cost is consumption of grid power imported at 28c/unit, plus the service fees per payment period. From that amount, subtract the solar power exported to the grid at 7c/ unit. That calculation will provide the net cost of household power with your solar system in place.

Your 90-Day Bill Example

If say your example 90-day bill comes in at $350. The fixed fee service charge might be $98 of that bill. You say; "Wait a minute, I pay that after I have installed a solar system?" That maybe evidence of gouging but it's not a solar conspiracy theory explanation. You have to expect a service charge from a utility company. This service charge issue is discussed a little more later in this article.

The usage is explained on the back of the bill. It shows that you, the utility client, exported 10 units a day to the grid on average (90days x 10units/day = 900 units). At 7c per unit, the feed in tariff would equate to $63.00 in credit. In this example the bill would have been $463 minus the credit = $400.

If the solar inverter showed that your system produced 20 units per day on average, then the house would have used 10 units from the inverter and 10 units was exported to the grid. This means your solar power system saved you buying an additional 10 units per day.

10 units x 90 days x 28c/unit = $252 in savings from solar power.

So the total benefit from solar generator for this bill would be $252 + $63 = $315.

You must recognize your solar panel's generated power used in self-consumption. There are homeowners who say their solar has not saved them very much. OK, some systems are underpowered and consumers feel like they are burning money. The installers of those solar units might be early contributors to a solar conspiracy theory.

If your solar system happens to develop a fault you need to turn your inverter off. If you need to do that, you will soon see how much solar power your system contributes to reducing your power bill!

Profit From Your Roof Space

You will find when you go searching online for solar prices, there will be advertisements popping up at the sidebar. There will be those annoying Google Ads about local deals from solar retailers in your area. They often promise to eliminate your power bill! It's simple, they say, you just need to join the solar revolution.

Some of those adverts suggest the customer consider lease to buy options. That is where a solar contractor puts a standard solar panel system on your roof and then offloads the financing to a third party. There will be variations on that theme of financing and lease ownership. A third party financier pays the retailer for the system and a lease / repayment arrangement is set in place with you.

The finance structures that you partake explain the rights and responsibilities of you and the bank. Some arrangements have the system getting paid off over a period of say 15 years. The whole system is leased to the homeowner and that householder is responsible for making the loan repayment.

For the installer and the financier, your roof is a roof space for lease. In a city there is a sea of roof space. It's a solar leasing opportunity.

The installer puts the solar system in place and gets the necessary approvals. They may get paid an ongoing maintenance contract fee. The bank might insist on that to protect your asset and you, the homeowner, has the benefit of ‘free solar energy”. The financing deal sets out the payback period and a loan repayment schedule.

The interest payments are often at the level of a home loan mortgage. Essentially, it becomes a second mortgage, and an agency of solar conspiracy theory. Some owners get the cost loaded into their first mortgage. There are guarantees in place for the financing company in the case of changing ownership or a mortgage default.

This financial lease is similar to a car lease and buy or the purchase agreement of a mobile phone. As with buying a phone from a telephone retailer, the retailer is protected and the deal is profitable for the retail company. You eventually own the equipment and have access to the services it provides. By the time you own the asset (payback period) the asset needs to be upgraded.

Instruction Manual For DIY Solar Equipment

Instead of going down the lease/ buy route, you might buy and install it yourself. You do the homework and know the right size of panel and accessories. But solar hardware is complicated.

Assuming there are instructions within your packaging (and it is written in English), you’re going to be very lucky if it actually makes complete sense. Maybe an instruction manual for installing solar equipment isn’t meant to be an evening read. These instructions aren't written for first time DIY solar enthusiasts.

Imagine when you come to considering building a solar panel system at your house. This expensive equipment isn’t stuff you want to be experimenting with. Your solar system doesn’t usually come complete as a DIY kit (unless you buy a retail package that permits your installation). For a DIY’er, you need to assemble a viable package. It will be you doing the system design, and it’s you who’ll buy the components to order.

You will order the brackets and racking to suit the size of system. Then, you must order the number and particular type of solar panels, and choose the inverter that works with them. You find a right sized charge controller (that device that keeps your batteries from overcharging or discharging too quickly).

Then find the number and particular type batteries that go with the system. You buy the wiring, the safety disconnects and so on. It’s all easy if you have done it a few times. You have big expectations from your new system, something like the size of the solar farm below.

It's not like your solar system is going to be feeding the whole city but with a lot of panels there comes a lot of electrical power. Electricity is dangerous.

You will need to have a licensed professional electrician to connect the power system to the grid mains power. All manner of warnings explain that you need to have this item and that part installed by an electrician.

There are dire warnings against having unqualified installations; the advice appears to take up more space than the instructions. The warnings are actually unnecessary because the instructions don’t break down the job into effective steps. That means having steps that anyone who works outside of the solar installation industry can comprehend. Maybe this is some evidence of solar conspiracy theory?

Matching Up Parts Is Complicated

So, to figure out what’s going on when you’re reading the “instruction book” you need patience. It will be an exercise in technical interpretation and language translation skills. Patience will save damage to the panels that won’t fit together, and save you throwing the controller back into the box and saying, “Stuff it! ...a solar conspiracy theory is weaving its magic!”

What I see is confusion. You need a diagram of the whole system that explains connections for the uninitiated DIY installer. You might pick up a 'Solar Design for Dummies' book at the news stand. That book might help those people who just want the electrician to do the final connection and sign off. I have had electrical inspectors say; “There is no way an electrician did this installation; it’s way too neat.”

It’s too bad that the companies that produce solar panels don’t produce the other parts that go with it. It would be great if solar panels came with the recommended brand list of compatible sizes for charge controller and inverter. The inverter converts the DC power coming from the panels into AC power for use by household appliances.

It would be nicer if solar panel makers also made the charge controller and inverter for their array. They could pretend they do and get their diagrams made up showing the whole system. Show the panels by name and suggest make/ models of other components the work reputably with their panels.

It’s Expensive To Do Solar

Solar equipment is very expensive, although the component items are becoming more affordable. Unfortunately, the price of solar power is front-end-loaded with a large expense at the beginning. You have a promise that the panels will start to pay for themselves after installation.

It’s fuzzy logic.

I think it's like the lawyer's favourite expression; "Well, It depends".

The payback periods will sometimes depend on whether you sell excess power to your power utility company. It depends on the whole system being rightly fit for purpose.

To sell excess power to the utility company you must connect to the grid. There are approvals from bureaucracy required if you are connecting to the grid. Grid work needs you to use a licensed electrician. There is an added insistence on the panels being installed by certified licensed electricians. Maybe this is the conspiracy underneath it all, or maybe it’s an effort to support electricians and bureaucracy?

Negative information about solar power and solar conspiracy theory won’t stop some people from investing in solar. People invest in solar power technology for a variety of reasons. Many do it to save money.

The grid back-up option is available if your home is connected to the grid. A grid connection attracts a regular periodic service charge. Consider the feed-in tariffs and subsidy level that are available. I know it’s difficult to bring the upfront costs down by much. Buying solar panels is a primarily a commercial consideration.

On the other hand you might choose to install solar batteries, but there will be big upfront costs for solar batteries. A solar battery bank enables you to save electricity and potentially gets you off the grid. If there were a solar conspiracy theory at play it would have to be to cover up those costs? You need to do the cost benefit analysis, maybe look at payback periods and the return on investment ratios. At some stage you need to press the buy button or stay connected to the grid.

Start With Small Solar Kits And Go From There?

The small solar kits that charge your cell phone are easily accessible. They are cheap and easy to find online. It sounds like a cool bonus; using small off-grid kits. If you embark on a solar project, you’ll be confronted with small solar kits that produce a handful of amps.

That’s great if you want to power something small in your RV. It’s good for powering a campsite coffee maker. Using one of these kits isn’t going to save the home or planet. They are convenient toy chargers. That amount of power output won’t run your fridge.

Have you tried to find a full-size solar panel at your local hardware store? Any solar panels worth buying are online. The dilemma from there is finding what is available that properly connects with that panel? Maybe this is where the DIY gets annoying. What goes with what? Maybe creating confusion is a part of a solar conspiracy theory?

It seems the whole solar power industry is complicated. Don't get so discouraged that you may consider abandoning your DIY solar project. You can definitely find the benefits of solar power when you do the sums. So, do a lot of research first. There are more houses in Australia getting solar systems connected. Maybe it’s inertia created by lower solar pricing or the sunny weather or the upward price trend of grid power electricity.

If you can do the grunt work and stay the course you will get a solar system that you understand and know works. You will need to find an electrician who doesn’t mind doing the high value check and sign off part of the work.

Energy Infrastructure Spend

Australians are investing in an energy revolution. 1.4 million households get some of their electricity from rooftop solar panels and battery storage. In ten years that will grow to 2.4 million.

That’s a staggering prediction but solar panel and solar battery manufacturers across the world are looking to Australia to launch products. They think the Australian domestic market will leap at any solar or home battery system that's sleek and cheap. Alternative energy is ready to shake things up.

Battery brands like Tesla are jumping into Australia and here is why:

Australia has the world’s highest penetration of solar rooftops

There are excellent solar resources. The sun always shines in Australia

Australia has among the world's highest electricity prices

This decrees that the opportunities for solar electricity generation are good. In the past few years, household power bills have doubled. The trend for price increase is happening across the world.

In Australia this increase was not due to the carbon tax, or the renewable energy target. It has nothing to do with the energy you use because following a remarkable drop in the price of wind, solar and storage, there was a short-lived energy glut.

What has driven the Aussie prices to the sky, and creating perfect conditions for solar and storage is the rising cost of the "network", the poles and wires. The utility network charge now accounts for half of the average household power bill. Some state electrical network charges are more expensive than others.

The High Cost of Power In Australia

These higher household electricity prices across Australia cause people to become increasingly indebted to the electricity companies. People need power but many simply can't afford to pay. Each year as prices increase and people drop into payment arrears their homes were disconnected from the grid until the payment arrears were cleared. The rate has doubled over the past five years.

These utility power networks had a monopoly in providing electricity for a long time. People needed to have access to electricity so most eventually paid their arrears by not paying something else.

Solar generation and battery storage has the potential to severely disrupt this supply and distribution paradigm. Blockchain technology is adding to the disruptive paradigm giving the possibility for peer to peer energy sales. With solar and battery technology prices dropping, many mainstream Australians will be able to afford a product that allows them to cut their grid power consumption. There will be opportunities to sell power to neighbours using the grid or choose to not use the grid at all.

But there's an obstacle. Australian government electricity regulators had required network companies to invest billions of dollars into upgrading the national electricity grid. The poles and wires became an asset that everybody will need to pay for. The regulator’s assumption was that everyone would be using the network. The objective is to distribute the cost as a fixed service charge across all of the consumers. Hop on board the solar conspiracy theory train.

The Cost of Poles & Wires Is Hitting Consumers

The regulator warned that the network demand projections were too high. Networks were making unnecessary infrastructure investments. Could that be a conspiracy in the making?

The network companies spent billions, and more, on the poles and wires. The assumption was that customers would be using and paying for the infrastructure over the next 40 years. That's how long it's amortised and it’s going to take energy consumers all of that 40 years to pay for it. Expenditure was based on the predicted use and growth of household power consumption. However, things don’t always go according to the plan.

The networks increased spending but energy demand didn't go up in line; it did the opposite. The service charges that were being put in place to pay for the infrastructure encouraged people to reassess their willingness to stay connected. Demand for grid power from Australian households fell. Since 2010 electrical demand has continued to slide.

Despite the year-on-year reduction in demand, networks continued installing the infrastructure that they predicted consumers would need. Eventually, the networks’ spending reduced. Now the electricity bills maintain an upward trajectory due to service charges.

What Are Consumers Paying For?

The utility networks stood to gain from investing in that extra capacity. The network charges in Australia are highest of any country in the world. The network companies were legally able to charge consumers through their power bills for every dollar spent on infrastructure. They could add on the regulated rate of return; another 10 per cent.

Network profit was generated because the networks could borrow at low government rates for interest, and charge consumers the full 10 per cent.

Calculated on the billions of dollars the networks invested, they networks make pure profit from the service charges. Networks get paid by consumers through their electricity bills.

The biggest spending on poles and wires happened in the government-owned networks. The networks’ profits increased as a result of the service charges added onto the electricity bills of business and homes.

Why didn't it stop? It’s a state governments cash cow, and what ruling party is going to mess with that? Consumers will continue to pay for an investment in poles and wires each time they pay their bill.

Reform Is Needed

Some energy networks are pressing to impose even higher electricity prices on their customers. Solar power and solar storage are imminent. In places where the government can make money from this possibility, they’re on board with this movement.

The governments say they want to progress renewables. In the meantime consumers will continue to pay for a poles and wires investment. That continues every time consumers pay their electricity bills. Government networks will milk the system for everything it's worth.

Networks are looking around and finding macabre ways to ensure the grid is paid for. They want to increase the fixed charges. Networks are aiming at charging every household a fee for the grid, whether they're connected to it or not. This gouging is not unprecedented in Australia. A landowner pays a service fee to the various government water authorities if they have a water main running past their property. That service charge is levied, whether the landowner wanted the service there or not; whether they are connected to it or not.

New Energy Suppression

Energy suppression is a kind of solar conspiracy theory. It suggests that viable technology involving cheap pollution-free energy sources are being suppressed. This may be happening because government, corporations, or advocacy groups are trying to maintain a status quo for an existing, albeit competing technology.

The devices that are suppressed might not be considered unproven technology. They might simply be low-cost energy sources that threaten the poles and wires, or the thermal power generation methods.

There are special interests groups on both sides of politics that usually claim the other side is associated with the aligned sectors of industry. Those sectors' business model would be threatened or advanced by the proposals. They meet in secret to discuss these things.

Claims of suppression include controlled discussion about accepting autonomous domestic energy generation. There is a growing movement towards solar power and battery storage in Australia. The governments and utilities appear to be supporting this but regulation of renewables will increase. A move to have every household pay for the national electricity grid network, whether connected to it or not, is not consistent with encouraging renewables. We don't allege a planned solar conspiracy theory but the reasons for being independent of the grid reduce when you pay for it regardless of connection.

Poles And Wires Infrastructure Controversy

The entire point of justifying investment in poles and wires infrastructure (whether needed or unnecessary) as a national asset developed for the greater good. This is an argument to have consumers pay for it. It's not an argument for non users paying too.

The infrastructure providers conspired with governments to gain for themselves the right to charge consumers a higher level of tariffs to cover their costs. The reality of that outcome ensured their incomes well exceeded their self-promoted investment.

There is fraud performed on the people of Australia. It is being perpetrated with the connivance of governments and "regulatory bodies" and vested energy interests. The consumers of electricity include domestic electricity users, public transport, industry and commerce. Many of these are not going to disconnect from the grid. They will never rely on solar and batteries alone.

Networks argue that with increases in the renewable penetration, and their separation over geographical distances, the grid is more needed now. It is required to support the distribution of power from many intermittent renewables to other consumers.

We may have to continue investment in the grid if larger renewable penetration is to be achieved. One of the reasons that a high penetration of renewables is unaffordable for the utilities is that as solar owners disconnect the burden of the services charges is distributed over fewer consumers. By encouraging peer to peer sales from solar owners, using blockchain technology, there will be more consumers staying connected to the grid.

Independence From Regulation

What if companies that want to run solar generations prefer regulatory separation from the giant coal fired or gas thermal generators? Say a group of businessmen are leasing $Millions worth of PV panels for the roof of a large complex, a commercial business premise.

The ‘alternative energy business’ might be operating at a site such as a group of factory outlets, a university or a shopping centre. That business, when connected to the grid, will be charged a service fee for the connection. Access to the poles and wires connection will assist the business to export power, so they will be happy to pay a service charge.

What if the business doesn’t want to sell the power to the power utility? What if, instead they want to sell their electricity to another business? Is regulation going to promote that opportunity? The business could sell at a price above the power utility’s buying price, but less than the customers’ utility price.

This energy business is paying for a service connection. Why couldn’t the business treat that access service as it’s own? Why not use the access to poles and wires to sell the solar generated power to its neighbouring business?

There is where the new blockchain technology could enable secure business-to-business transactions. See the article about peer to peer energy sales when you want to read further. Maybe the electricity regulation bureaucracy is going to promote this to encourage it to happen? It will keep more people connected to the grid.

Peer-to-Peer Energy Sales

The solar energy business can offset the leasing cost of the PV system as a legitimate business operating expense. The expense of the utility service fee is also claimable against its electricity sale income. By any measure, it makes excellent economic sense for this business to sign up for accessing the network (poles and wires) grid service.

The poles and wires provide a service network not unlike the Internet or the national roads system. The utility company that owns the poles and wires already charge a toll to the users. The connected community might buy and sell electricity to each other. If the utility were no longer the only retailer for electric power, then consumers and generators could compete for business.

Anyone who chose to disconnect from the grid would not be penalised for having an autonomous electrical generating system. They simply don’t need the service and like disconnecting from a phone company, they stop paying the service fees.

Initially, this new solar business project might just level out peak energy demand. For the business at the start that means electricity being used for air conditioning and computing during the day. That will ultimately save consumption of electricity at peak times when energy rates are high. Extending this further, the business might invest in many more panels and add battery storage. The solar generator business can operate to sell power for periods beyond the peak.

So, What’s Next?

The underlying thesis of utility companies is that none of this renewable supply actually reduces emissions. This is because it doesn’t lower the need for base-load electricity capacity: Network generation could be needed to supply power on wet cloudy days. The governments argue that grid infrastructure and the base-load supply (typically coal-fired) is required. That argument prevails regardless of how many households and businesses deploy solar PV and batteries.

Solar power is cheaper now than it was 5 and 10 years ago. The subsidy that has been paid to households for installing solar power or solar hot water will eventually go. It’s fortunate that year-by-year the renewables are cheaper to buy, albeit installations are more regulated and complex than they were back then.

The peer-to-peer energy sales market looks good to boom. Currently every Kilowatt-hour of electricity produced by a solar system and bought by the Energy retailers is around 7.0 cents. In Australia in 2018 consumers buy electricity from their utility for around 30.0 cents/kWh. The universal service charge is a gruesome consideration. But, if you’re connected to the grid now, your power bill already includes network service charges.

For the grid connected solar system owner, the solar investment has been a worthwhile. Maybe a Tesla or similar battery setup could be the icing on the cake that permits power autonomy and future disconnection.

In conclusion, we will require a network grid, both national and localised. Even if it is only to make solar energy available from your solar generator to your neighbour at a price you negotiate between yourselves. It looks like utilities are in favour of blockchain developments, albeit for their own reasons. This means the peer to peer sales of energy will become a reality that has benefits for networks and solar owners; no solar conspiracy theory there!